Brokerage Firm Review: Independent Financial Group, LLC

Independent Financial Group, LLC (“Independent Financial”) (CRD# 7717) has many different complaints filed by FINRA (Financial Industry Regulatory Authority), state regulatory organizations, and investors such as yourself. At the Law Offices of Robert Wayne Pearce, we have investigated Independent Financial, its regulatory and customer complaints, and have also represented investors with claims of fraud, negligence, and breach of fiduciary duty against this organization and its financial advisors.

If you believe you have a claim against Independent Financial, you should strongly consider hiring an investment loss lawyer. You should not wait until it’s too late to file a claim. The Law Offices of Robert Wayne Pearce, P.A., offers free consultations. Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.

Can I Sue Independent Financial Group, LLC?

If you’ve lost money caused by Independent Financial and/or its employees’ misconduct then the answer is, YES,  you can sue Independent Financial but the odds are you signed away your right to sue in court and agreed to resolve your dispute in a FINRA arbitration proceeding.  Attorney Robert Wayne Pearce has over 40 years of personal experience in FINRA arbitration proceedings and knows very well how you can not only sue Independent Financial in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against Independent Financial is to call Attorney Pearce at our office at 800-732-2889.

What is Independent Financial Group, LLC?

The Independent Financial (CRD# 7717) predecessor was formed in 1978.  Since then there have been several name changes and restructuring of the company which began operating throughout the United States and its present form in the early 2000’s.  The company is headquartered in San Diego, California.  Its independent broker-dealer Business Model has grown through acquisition and organic development of primarily one and two person registered representative offices supervised remotely. Today there are over 370 Independent Financial branch offices with over 660 registered representatives in every state.  It is now the largest broker-dealer and investment advisory firm in the United States.

Independent Financial Group Has Many Different Regulatory Problems 

Independent Financial rapid growth has not been without consequences. There have been approximately 9 Federal, state and self-regulatory body disclosure events; that is, final and formal proceedings initiated by a regulatory authority (e.g., a state or federal securities agency like the U.S. Securities and Exchange Commission (SEC) or self-regulatory body like the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA) ) for a violation(s) of investment-related rules or regulations. In addition, there have been scores of customer complaints filed against Independent Financial for misconduct by its securities sales and investment advisory representatives that are not reported by the firm on its Central Depository Record. 

We have reported and written about these regulatory problems and customer complaints over many years. Independent Financial is a repeat offender: there are 2 other FINRA reported disciplinary proceedings citing the firm with one form of supervisory lapses or another in the last decade.

A BRIEF OVERVIEW OF SOME OF THE REGULATORY PROBLEMS INDEPENDENT FINANCIAL GROUP HAS FACED OVER THE YEARS

Independent Financial has been repeatedly censured, warned, and fined over $1.5 million for its own misconduct and failure to supervise its army of financial advisors.* A few of the notable FINRA Sanctions for its Supervisory Failures are below:

SEC Orders Independent Financial To Pay Over $1.4 million For Mutual Fund Sales Abuse

The SEC, investigated and found multiple breaches of fiduciary duty and inadequate disclosures by registered investment adviser Independent Financial in connection with its mutual fund share class selection practices and the fees it and its associated persons received pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“12b-1 fees”). 

During the relevant period, the SEC found Independent Financial advisors purchased, recommended, or held for advisory clients mutual fund share classes that charged 12b-1 fees instead of lower-cost share classes of the same funds for which the clients were eligible.  Further, Independent Financial and its associated persons received 12b-1 fees in connection with these investments.  Independent Financial and failed to disclose in its Form ADV or otherwise the conflicts of interest related to (a) its receipt of 12b-1 fees, and/or (b) its selection of mutual fund share classes that pay such fees. During the relevant period, the SEC found that Independent Financial and its associated persons received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes.

As a result of the conduct described above, the SEC concluded that Independent Financial willfully violated Section 206(2) of the Advisers Act,

and censured the company and ordered it to pay disgorgement and prejudgment interest to affected investors, totaling $1,426,150.64. 

Click to read more.

FINRA Sanctions Independent Financial For Unsuitable Investment Recommendation Supervisory Failures

FINRA investigated and found that Independent Financial failed to reasonably supervise one of the firm’s former registered representatives who made unsuitable recommendations to customers.  The financial advisor recommended that his customers concentrate their retirement assets and liquid net worth in speculative and illiquid securities.  Independent Financial became aware of red flags indicating that the stockbroker was making unsuitable recommendations to his customers yet the firm failed to take reasonable actions to investigate and stop the misconduct. By reason of the foregoing, FINRA concluded that Independent Financial violated NASD Rule 3010 and FINRA Rules 3110 and 2010, censured, and fined the company $200,000.

Click to read more.

Why Does Independent Financial Group, LLC Have So Many Regulatory Problems And Customer Complaints?

Independent broker-dealers are notorious for their lax supervisory practices and procedures. The business model of these franchise type operations is to open many offices nationwide for steady growth of fixed monthly revenues without the costs attendant to a full-service branch office with on-site manager, compliance officer and operation personnel. The registered representatives of these independent broker-dealers generally operate as separately incorporated businesses. They are not employees of the broker-dealer and therefore not controlled in the same manner as full-service brokerage firm representatives. The registered representatives control their structure and costs to maximize profits and often leave the protection of investors’ rights and interests as their lowest priority.

The typical supervisory organization of independent broker-dealer operations is to have other independent contractors operate Offices of Supervisory Jurisdiction (OSJs) to monitor the registered representatives from geographically remote offices and then report to the main franchisor’s compliance office at national headquarters. The supervisors at the OSJs are not employees of the franchisor and often run their own brokerage, insurance and other businesses. They are not devoted full-time supervisors of the smaller branch offices. Consequently, OSJ managers cannot and do not supervise the day-to-day operations of the registered representatives of these Independent broker-dealers. 

Generally, there is no immediate review of new accounts opened, securities transactions, business records, cash or securities receipts and deliveries, correspondence and business activities unrelated to the securities brokerage operation at these independent brokerage firms. The lax supervision leaves investors who have transferred their accounts to the smaller independent broker-dealer vulnerable to sales of securities that have not been reviewed or authorized by anyone other than the sales representative earning a commission. There may be no one onsite to detect forgeries of clients’ signatures on documents, the placement of inaccurate information about a client’s investment objectives and financial condition to document the suitability of a particular investment recommendation. Oftentimes there is no daily review of sales literature and client correspondence to protect against misrepresentations and misleading statements being made to investors. In fact, it is not unusual for there to be only one compliance audit visit per year at many of these offices.

These Independent brokerage business operations are worrisome to the North American Securities Administrators Association (NASAA), which has documented more instances of sales abuse and consequently investor losses at these firms than the traditional brokerage firms with branch offices with on-site managers and compliance personnel.

Did Independent Financial Group, LLC Advisor Misconduct Cause You Investment Losses?

When financial advisor misconduct has caused you to lose substantial value to your investment accounts, you have the right to seek reimbursement from the responsible parties. Independent Financial is responsible like any employer for its financial advisors acts and omissions. In addition, it has an independent duty to supervise its stockbrokers and investment advisors. These cases can be extremely complex, and so having the support of a reputable attorney who is experienced in recovering investment losses for investors is key to your success. Many customers make the mistake of contacting Independent Financial without representation with an attorney about their complaints and have their complaints denied.

Consult With An Attorney Who Recovers Investment Losses Caused By Independent Financial Group, LLC Today!

The attorneys at The Law Offices of Robert Wayne Pearce, P.A., have helped countless investors over the last 40 years recover the losses from their investment accounts that were caused by broker negligence or misconduct. The firm has extensive experience with Independent Financial cases, and Attorney Pearce is committed to seeing that those responsible for the losses you have suffered are held fully accountable.

Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.

Robert Wayne Pearce

Robert Wayne Pearce of The Law Offices of Robert Wayne Pearce, P.A. has been a trial attorney for more than 40 years and has helped recover over $170 million dollars for his clients. During that time, he developed a well-respected and highly accomplished legal career representing investors and brokers in disputes with one another and the government and industry regulators. To speak with Attorney Pearce, call (800) 732-2889 or Contact Us online for a FREE INITIAL CONSULTATION with Attorney Pearce about your case.

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